Loeb Bullish on Argentina No Matter Who Wins in Runoff Electionby
Third Point counts Argentine bonds as top sovereign holding
Loeb says sovereign credit was up 3.1 percent in third quarter
Billionaire hedge fund manager Dan Loeb, who counts Argentine bonds as his largest sovereign holding, said he’s confident in the debt’s prospects no matter who wins the nation’s runoff elections this month.
“We’re looking forward to the runoff Argentinian presidential election,” Loeb said Wednesday in a conference call held by Third Point Reinsurance Ltd. He will “be pleased with a victory from either candidate.”
Loeb is among hedge-fund heavyweights including George Soros and Richard Perry betting that President Cristina Fernandez de Kirchner’s successor will unwind her interventionist policies, resolve the nation’s second default in 13 years, and bring Argentina back to international bond markets. After almost tying Fernandez’s ally Daniel Scioli in elections last month, opposition candidate Mauricio Macri is the favorite to win the runoff Nov. 22.
Despite being in default, Argentina’s overseas bonds have surged 21 percent since a U.S. court order began blocking the nation’s bond payments in July 2014. The ruling prohibits Argentina from paying holders of restructured debt until creditors leftover from the nation’s 2001 default, led by Paul Singer’s Elliott Management, are paid in full. Fernandez has refused to comply with the order.
Loeb oversees investments for the Bermuda-based reinsurer and said government bonds were a bright spot during a period in which he endured losses on equity bets.
“Sovereign credit was up 3.1 percent on average exposure during the quarter due to strength in Argentinian government debt, the largest position in our credit portfolio,” he said.
Loeb’s bullishness on Argentina isn’t new. In August 2014, he called Argentina’s recent default a “delay” and said the country would resume bond payments in 2015.
The bond rally has extended since the Oct. 25 elections on optimism that Argentines will demand policy changes by the next administration and that Macri, who has vowed to resolve the dispute with the holdouts, stands a chance to win the second round.